Winding-up petition admitted against company for non-payment; respondent's defense rejected; payment ordered.

The Court admitted the winding-up petition filed by the petitioner against the respondent company for non-payment of the due amount for supplied goods. The Court found the respondent's defense of defective goods to be unsubstantiated and ordered payment of the outstanding amount with interest. Publication of the petition was deferred for two weeks to allow the respondent to make the payment, failing which publication would proceed in specified newspapers and the official gazette. The judgment emphasized the significance of timely and genuine communication in commercial transactions and relied on legal precedents to support the decision.

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Issues:
- Winding up petition under Section 433 read with Section 434 of the Companies Act, 1956.
- Dispute over non-payment for supplied goods and alleged defective quality.
- Validity of 'C' Form as proof of sale and acceptance of goods.
- Reliance on Commission Agent's affidavits and their credibility.
- Communication of defects in goods and timing of such communication.
- Consideration of legal precedents in similar cases.

Analysis:

The petitioner sought winding up of the respondent company for non-payment of Rs. 39,98,754/-, the balance due for 386.140 metric tons of sponge iron lumps supplied. The respondent claimed the goods were defective, containing only 50% FE instead of the required 77.80% FE, rendering them unusable. The respondent alleged the petitioner failed to lift the defective goods despite assurances, leading to the issuance of Form 'C' by the Central Sales Tax Department.

The petitioner contended that the liability was clear as goods were supplied, and the 'C' Form acknowledged the receipt of goods worth Rs. 62,22,401/-. Legal precedents were cited to support the position that the respondent's defense of defective goods was a sham to avoid payment. The respondent argued that disputed questions of fact and law regarding the quality of goods should not be addressed in a winding up petition.

The Court noted that the transaction was admitted, and the 'C' Form was a proof of sale and acceptance of goods. It observed that the respondent's defense of defective goods was raised only after the winding up petition, with no record of communication of defects to the petitioner. The Commission Agent's affidavits were scrutinized, with discrepancies highlighted to question their credibility. The Court found the respondent's defense to be suspect and illusory, akin to a previous case where a similar defense was rejected as an afterthought to avoid winding up.

Ultimately, the Court was satisfied that the respondent owed the debt to the petitioner and ordered payment of the outstanding amount with interest. The petition was admitted, with publication deferred for two weeks to allow the respondent to make the payment; failure to comply would result in publication in specified newspapers and the official gazette.

In conclusion, the judgment upheld the petitioner's claim for payment based on the clear evidence of goods supplied and the lack of credible communication regarding defects in the goods. The Court emphasized the importance of timely and bona fide communication in commercial transactions to avoid disputes and upheld the principles established in prior legal precedents.

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